Bull run on CSE acquires further momentum

“Market’s gone crazy, when will the bubble burst?”, asks broker

The mind-boggling on the Colombo Stock Exchange which on Friday drove the benchmark All Share Price Index up by 291.34 points – “perhaps the biggest ever single day gain,” a broker said, has left brokers, market players and investors stunned.

“The market’s gone crazy,” a leading broker said requesting anonymity. “It’s an ever-growing bubble and nobody can say when it will burst. It is difficult to sustain this kind of momentum without foreign and institutional buying.”

Mr. Niroshan Wijesundera, the head of marketing at the CSE, said that Friday’s peak of the ASPI had fallen a little short of the highest ever 7,811 achieved on Feb. 14, 2011.

But brokers speaking from memory reckoned that the Rs. 12.46 billion turnover was among the highest ever achieved without special transactions like takeovers etc. done on the trading floor.

While some analysts said that the bull run was without any scientific basis, Wijesundera said it was largely retail driven.

“The very low prevailing interest rates would have influenced fund movement to the stock market,” he said. “Also, global markets are moving up.”

Brokers said that that Friday’s upward momentum was fueled largely by the LOLC and Hayleys groups with LOLC Holdings which has been moving up for the past several days seeing its share price up Rs. 45.25 from the previous close with over 5.64 million shares traded traded. The counter generated a turnover of Rs. 1.17 billion.

LOLC is controlled by its deputy chairman, Ishara Nanayakkara and related parties, while Hayleys is controlled by Dhammika Perera. Although LOLC has paid no dividends since 2012, shareholders have been compensated with capital appreciation of its shares. The group was involved in a mega international deal last year, selling its 70% stake in Cambodia’s leading micro-finance company for Rs. 120 billion.

Haycarb, the activated carbon manufacturing subsidiary of Hayleys, saw its share gaining 72.75 to close at Rs. 757.75 on 218,609 shares traded between Rs. 685 and Rs. 737 through 479 transactions. Hayleys itself was up Rs. 21 to Rs. 491.25 and Dipped Products up Rs. 19.75 to close at Rs. 401.25 on 1.83 million shares transacted 1,157 trades.